What to expect from the Bank of Japan meeting? - Credit Suisse

FXStreet reports that the Bank of Japan is scheduled to announce its decision on Friday at 03:00 GMT. According to Credit Suisse, no change is expected in its main policy settings for rates and YCC.

“The BoJ seems to believe that the YCC has worked well, and it is unlikely for the Bank to amend the current setting of YCC (yield curve control), where it targets the Tier 3 deposit rate and the 10-year JGB yield. Meanwhile, the Bank may tweak the 10-year JGB yield target. In other words, we do not rule out the possibility that the Bank would rewrite the 10- year JGB target from ‘around 0%’ to ‘0-0.25%’. The Bank appears to have two options for the ETF purchase operation, namely, revising the target to a range-based one, such as ‘2-4 trillion yen’ or scrapping the target. Given that the BoJ’s ETF holding already amounted to 36 trillion yen or around 4.8% of the total market cap of Tokyo Stock Exchange, it may opt for the latter, which will give the Bank more discretion for the buying amount. The BoJ would simultaneously demonstrate its intention to support the equity market proactively in critical times. The Bank is expected to reconfirm that it will continue to make monetary base expand until after the CPI inflation rate rises above +2%.”